April 2000

Opting Out

With insurance reimbursements down, two Renton doctors have created SimpleCare, a plan that gives patients a reduced rate for non-insurance, cash payments.

Physician frustration with the health care system is running at a renewed high. In December, more than 100 surgeons canceled their contracts with Regence Blue Shield, complaining the reimbursements were too low. Two Renton doctors have parlayed into a national network their plan to offer cash-paying patients a price break.

"I hear a lot of frustration, and not only frustration from the specialists, I hear it from primary-care people, too," says John Arveson, professional affairs director for the Washington State Medical Association.

"Ultimately you have to generate enough money through the practice to pay the overhead, to pay the staff, and hopefully to have some money for the physician to take home."

Money is not the only cause of frustration, Arveson says. Gatekeeper provisions that require patients to see their primary physician before consulting a specialist, audits with no notice, and a seemingly endless stream of paperwork demands are also common complaints.

"I've heard of small offices having to have a contract coordinator for as little as one or two doctors contracting with only a few plans," Arveson says.

Keep it simple

In 1997, Dr. Vern Cherewatenko and Dr. David MacDonald, both of Renton, created SimpleCare, a plan that lets patients pay less for office calls if they opt to pay cash instead of using insurance.

The way it works is the patient buys a low-cost indemnity plan that covers major medical problems rather than one of the more inclusive health care products or membership in an HMO. The patient then pays for any office visits out-of-pocket, but at a lower rate than an insurance company would be charged.

Cherewatenko, a primary-care physician, gives the example of a patient who shows up with a cold. "If I bill your health insurance $79 for an office visit, I'd receive $43," he says. "Subtract out the computer system and the staff to do the billing, I'd ultimately realize $23. With an overhead of $30, I'd lose $7. You can't stay in business if you are getting paid less than your overhead."

On the other hand, if a patient pays $35 cash, the physician walks away with $5 above the cost of the visit.

The concept appears to be catching on. Physicians who join the nonprofit American Association of Patients and Providers for $35 a year receive materials on how to set up their own version of SimpleCare. So far, about 500 doctors have signed up, Cherewatenko says.

According to the Renton doctor, about 3,000 Washington state residents are participating in the plan and another 5,000 are receiving care through it nationally.

-- Irene Svete